ABC Company produces tables and purchases 20,000 units of wood each year at a cost of $20 per unit. Sk8 requires a 10% annual rate of return on investment. In addition, the relevant carrying cost (for insurance, materials handling, breakage, etc.) is $0.55 per unit per year. The relevant ordering cost per purchase order is $75.

1. Calculate ABC's EOQ for the wood.

2. Calculate ABC's annual relevant ordering costs for the EOQ calculated in requirement 1.

3. Calculate ABCs annual relevant carrying costs for the EOQ calculated in requirement 1.

4. Assume that demand is uniform throughout the year and known with certainty so there is no need for safety stocks. The purchase-order lead time is a month. Calculate ABCs reorder point for the wood.